North Korea Hacking Group Has Stolen $721 Million From Japan

The Hackers Group affiliated with North Korea has stolen $721 million from Japan since 2017, as per a study conducted by a U.K based compliance specialist. A Nikkei business daily report on Monday noted that the amount equals 30% of such losses worldwide. Notably, North Korea is believed to be using cyberattacks to target Japanese crypto assets. The scale activities of the North Korean affiliated groups first surfaced in 2014.

This report comes after Group of Seven (G7) finance ministers and central bank governors noted in a statement on Saturday that they support measures to counter growing threats from illegal activities by state actors, including the theft of crypto assets.

The weekend gathering of G7 finance chiefs did not single out China as a threat in their communique, but left signs the world's second-largest economy will loom large at this week's summit in Hiroshima https://t.co/ilE2z7egUT

— Reuters (@Reuters) May 15, 2023

Elliptic, which analyzed on behalf of Nikkei, noted that North Korea had stolen $2.3 billion in cryptocurrency from businesses between 2017 and 2022. This includes Japan which counted for the most significant portion, followed by Vietnam ($540 million), the U.S. ( $497 million), and Hong Kong (281 million). Nonetheless, Elliptic has technology that tracks and identifies money transfers on the blockchain where cryptocurrency is traded.

In a report released on April 5 by a U.N Security Council panel of experts seen by Reuters, North Korea stole about $600 million and $1 billion of cryptocurrencies in 2022. This is double the previous year’s amount. However, Elliptic estimated the figure at around $640 million last year.

North Korea Cyberattacks

North Korea employs two methods of cyberattacks, including ransomware and hacking. However, Elliptic’s analysis focused more on hacking, that is, stealing directly from crypto exchanges. North Korea is thought to focus on direct attacks on exchanges, as one successful hack can bring in a massive haul of crypto assets.

On the other hand, according to Japan External Trade Organization, the $721 million stolen from Japan is 8.8 times greater than North Korea’s exports in 2021. Most hackers have targeted Japan and Vietnam, where cryptocurrency markets have expanded rapidly. However, it is thought that many operators in the above regions have slack security. According to a person familiar with the matter, at least three crypto exchanges in Japan have been broken into by North Korean hackers between 2018 and 2021. This led to one company, Zaif, shutting down after losing 7 billion yen ($51.4 million) in 2018.

However, it is cumbersome for North Korea to obtain foreign currency due to the international sanctions imposed. The cyberattacks are a national strategy meant to compensate for the loss of foreign exchange from North Korea’s greatly restricted coal trade. Additionally, these affiliated groups steal information on defense, health care, and other areas. One of the cyberattack experts noted that:

The technology of the hackers’ programs is higher than that of attack groups in other countries.

Nonetheless, the international community has ruled out Pyongyang’s criticism. Pyongyang is believed to have targeted the crypto assets of other countries to obtain the foreign currency it uses for its missile program. This could, in turn, threaten the security of Asia.

The U.S. Focus On DeFi Hackers

Last year in October, Japan’s National Police Agency and other authorities singled out North Korea. They called for caution among crypto exchange operators. The U.N. Security Council panel of experts repeated its warning in its 2021 report. It asserted that the country continues hacking operations to bolster its nuclear and missile programs.

However, if the stolen cryptocurrency is used for military purposes, this poses a security threat. Nonetheless, Japan has strengthened its security by amending its Payment Services Act, as other countries are following in its footsteps. However, they have yet to respond to new technologies such as decentralized finance (DeFi), in which programs on the blockchain conduct financial transactions.

Further, the United States Department of Justice (DoJ), a crypto tsar, is shifting its focus to hunt for Decentralized Finance (DeFi) hackers and exploiters amid the rise of illicit crypto activities. In a report by Financial Times on May 15, the director of the Justice Department’s National Cryptocurrency Enforcement Team (NCET), Eun Young Choi, stipulated that “the department is focusing on thefts and hacks involving DeFi, particularly chain bridges.”

Choi, a prosecutor with almost a decade of experience in the agency, added that it is a significant issue for the DOJ, given that North Korean state-sponsored hackers have emerged as critical actors in the ecosystem.

With the U.S. DoJ stepping in to focus on the exploiters and hackers, it is worth noting that the cyberattack rate may diminish and lead to the crypto sector propelling once more.

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